World's leading information technology (IT) services company Cognizant on Wednesday warned that its revenue is likely to fall in current financial year and it will lay off 3,500 employees or 1 per cent of its work force.
"Full-year 2023 revenue is expected to be $19.2 - $19.6 billion, or a decline of 1.2 per cent to growth of 0.8 per cent, or a decline of 1.0 per cent to growth of 1.0 per cent in constant currency," Cognizant said in a press release.
The company expects revenue in second quarter of current financial year to come in at e $4.83-$4.88 billion, a decline of 0.6 per cent to 1.6 per cent, or a decline of 1.0 per cent to flat in constant currency.
The company has also alerted that it plans to lay off 3,500 employees or 1 per cent of the workforce as part of changes it is making to its "NextGen Program".
“In connection with the NextGen program, we expect to record costs of approximately $400 million with approximately $350 million of such costs anticipated in 2023 and approximately $50 million in 2024. This consists of approximately $200 million of employee severance and other costs primarily related to non-billable and corporate personnel, which we expect to mostly incur in 2023, and approximately $200 million of costs related to the consolidation of office space, with approximately $150 million in 2023 and $50 million in 2024. We do not expect the NextGen program to drive meaningful cost savings until the second half of 2023 and the real estate actions will not begin to generate savings until 2024. By 2025, we expect to reduce our annual real estate costs by approximately $100 million versus 2022. This reduction in real estate costs is net of investments to expand our real estate footprint in smaller cities, primarily in India, in support of our hybrid work strategy. We expect the personnel-related actions of this program to impact approximately 3,500 employees, or approximately 1 per cent of our workforce,” Cognizant said in a press release.
Meanwhile, for the quarter ended March 2023, Cognizant's net income rose 3 per cent to $580 million compared with $563 million during the same quarter last year.
“Our accelerated bookings growth in the quarter, which included several large deals and a healthy mix of new and expansion work, reflects the strengths of our services, our brand, and the longstanding relationships we have with our clients. I am also encouraged by the continuing reduction in our voluntary attrition,” said Ravi Kumar S, Chief Executive Officer.
Bookings in the first quarter grew 28 per cent year-over-year. On a trailing-twelve-month basis, bookings grew 9 per cent to $25.6 billion, which represented a book-to-bill of approximately 1.3 times, Cognizant said.
Total headcount at the end of the first quarter was 351,500, a decrease of 3,800 from Q4 2022 and an increase of 11,100 from Q1 2022. Voluntary attrition - Tech Services on a trailing-twelve-month basis, declined to 23 per cent from 26 per cent in Q4 2022 and 30 per cent in Q1 2022, the company added.